The TV Industry’s Dreadful Little Secret

By John Martellaro

May 25th, 2012 3:40 PM EDT

We all knew the business model, commercial breaks, for the TV industry is a mess. But now the foolishness has been taken to new heights. Fox has filed a lawsuit against Dish Network for taking care of its customers. The whole industry is ripe for disruption and may not even see it coming. Perhaps Apple does.

Is there anyone who actively seeks to watch commercials on TV? Forty years ago, people were getting up to use the bathroom during commercial breaks. Why? Not interested. There have even been stories of water pressure in some neighborhoods dropping in sync with a big TV event’s commercial breaks.

TV ads are an old and outdated business model. And yet the TV industry continues to fool itself. The networks play a game and try to fool the advertisers into thinking that ads are being watched. All manner of trickery and self delusion are used to quantify ad effectiveness: Neilsen, surveys, and even a formula for how much an ad counts when it’s played back on a DVR from a previous recording. As I recall. there have even been experiments with sensors on top of the TV to detect if anyone’s in the room watching during a commercial.

In turn, the advertisers fool themselves into believing that their ads are effective, and if they don’t seem to be, ever more draconian measures are invoked, including sex.

No one that I know of likes to have a good TV show or movie interrupted by ads. We’ve all just had enough of the silliness. I remember once, years ago, I clocked a commercial break during a late night movie at nine minutes. When the movie resumed, my wife and I had lost the thread of what was happening. In this era of DVRs, watching ads is not considered cool or useful anymore.

The theme articles for all this are multiple. First, Dish Network introduced “Auto Hop” for some of their DVRs that could auto-detect and skip over all the ads during a playback. This is basically what you do now with the 30-sec fast forward button, but the software does it automatically. One analysis I saw said that this was a weapon Dish was developing to counter ever increasing fees by the networks to carry their content. But the ostensible reason is to benefit the customers. Sounds good.

This brought the network executives into a hissy-fit. CBS’s Les Moonves wondered how he could possibly bring fine TV shows like CSI to his audience without commercials. Disney’s Bob Iger chimed in and reiterated that great TV shows can’t exist without ads.

Dish has countered by saying the Auto Hop software simply does what the customer already does manually. (Perhaps they want to save us couch potatoes from using a extra calorie or two.)

This is all lunacy. For the TV industry to grudgingly allow a 30-sec skip button but launches into howls of protest for software to do it is both amusing and ironic. Ironic, because it’s usually the other way around. That is, large, hightech companies have figured out how to use software and hardware to coerce us, invade our privacy, and max out our credit cards. But when software technology is used to actually serve the customer, the Big Guys go into a panic and call in the attorneys.

The way out of this mess has already been found by many. Customers buy a TV series, after the season is over, on DVD or Blu-ray. They watch Hulu. They rent or stream movies from Netflix. Or they pay for a good show, without interruptions, on Apple TV. This is not a pervasive phenomena yet because no single company has had the power, influence, and technological expertise to make the grand exodus from the silliness a practical and pervasive reality.

Fortune has posted a really good article on “How Tim Cook is changing Apple.” It’s a good read. And what’s truly interesting is that the pundits never saw this coming. They never understood how a new CEO with great talent might step in and run things a little different, fix some nagging problems, and do things better in small ways that Mr. Jobs wouldn’t allow. Instead, the shallow fixation was, “Jobs is gone, Apple is doomed.”

BYOD causes significant problems for IT managers, but it also is the key to hiring smart young talent. The notion here is that Apple’s investment in youth finally paid off big time. Smart, technical, young people are saying to companies, in the hiring process. “If you’re going to force me to use a BlackBerry, I consider you all doofuses, and I’m looking for a different company to work for.” There more elaboration here by Ryan Faas: “BYOD Is A Great Fit For Small Business.”

It turns aout that iPads play a pivotal role in helping Greece restructure its debt. Think of it this way. It’s was a lot cheaper to sell Greece’s Finance ministry 100 iPads than to buy the whole country. “100 Apple iPads save Greece $140 billion.”